Most emerging Asian currencies rose in lacklustre trade on Thursday, as investors cautiously hoped that Britons would decide to stay in the European Union a few hours ahead of the UK vote. The Singapore dollar advanced to its strongest level in more than two months. The South Korean won hit a seven-week high and the Malaysian ringgit touched a six-week peak. Trading volume in most regional currency markets, including those countries, was low.
Such gains came as two opinion polls showed a last-minute rise in those supporting Britain to remain in the EU, although the result of the UK referendum was largely considered too close to predict. "Markets are betting on Bremain as the latest polls suggested," said Christopher Wong, a senior FX strategist for Maybank in Singapore. "Asia FX could hold on to gains if Bremain vote wins by a large margin. We caution that Bremain by slim margin could trigger second round of volatility as a slim win could put PM David Cameron's political career at risk," said Wong, referring to Britain's prime minister.
Even with a vote to stay, if the margin is not big, Cameron could struggle to repair the rifts in his party and hold on to his job. The ringgit rose as much as nearly 0.8 percent to 4.0040 per dollar, its strongest since May 12, on some commercial demand in thin liquidity. Traders found few reasons to add bets in either way ahead of the British vote.
"If you play big in a wrong way, it will be tough to recover your losses tomorrow morning," said a senior Malaysian bank trader in Kuala Lumpur. "If the result is meaningful, there will be follow through. We play on that, we don't need to hurry." The won gained as much as 0.4 percent to 1,149.9 per dollar, its strongest since May 4, on exporters' demand for settlements in thin trading. The South Korean currency pared some of its earlier gains as importers bought dollars around 1,150 for payments.